Analytics for all - business intelligence in 2015

The coming year will see business intelligence (BI) tools move out of the IT department and filter into the rest of the enterprise.

Business intelligence tools are typically seen as powerful means to reveal useful insights for a business about its operations and its customers. But traditionally the use of these tools require a very specific skillset; more often than not, they are used by “a very small subset of folks” within an organisation, according to Mark Koh, a senior industry analyst at Frost & Sullivan.

Not for much longer; Koh predicts that 2015 will see the ‘democratisation’ of BI tools - the spread of these tools out of the confines of the IT department and data-focused business units and into the hands of the general populace. This is thanks to the emergence of BI tools that don’t require the specialist skillsets that traditional tools do.

“The recent trend you’re seeing with the success of [data visualisation vendor] Tableau and a few others - deeper discovery tools that are coming out - I think this will be the trend in the short term,” Koh says.

He predicts that the “ability to let these tools permeate into the organisation” will lead to a lot of growth in this area in the coming year.

“You see things like self-service BI tools, data discovery tools, the ability to facilitate data integration, so that the information gets to the hands of the line of business,” Koh says. It’s “business analytics for the masses within the organisation”.

Craig Stires, an associate vice president at IDC Asia/Pacific, agrees: “You’re going to continue to see a lower and lower barrier of technical requirements. As you have better tools that come out that start to strip out some of the programming requirements, it’s going to be accessible to a ton more people. I think that is changing and I think that will change quickly.”

Guy Cranswick, an advisor at IBRS, says it’s “generally true” that BI tools will reach the masses, “though whether it’s the tools that lead or the users that take hold is debatable”.

“BI and other related analytics functions have moved out of IT, but again, that depends on the tools. The overall aim is to make BI run through a business so it informs and rationalises decisions and understanding. In that context democratisation is a force that brings the information and tools to a wide range of users,” Cranswick says.

This flattening of BI across the organisation is interesting, given that the data scientist - a job devoted entirely to combing through data and generating insights - is also meant to be becoming more common.

“I totally agree with the rise of the data scientist,” Koh says, “but the honest truth about it is that not many folks have that skillset. If you look at what is required to perform as a data scientist, it’s not so much somebody who has the necessary skillset for statistics and programming and mathematics.”

Data scientists also must be business savvy, know what to look for in the data and how to put these insights to use in the organisation, Koh says. They also need to “have some sort of hacking ability” - be fluent with R, SAS, SPSS or the like, and be able to work with databases.

Data scientists are around, Koh says, but “only very limited number of folks in the enterprise have those particular abilities, and a lot of them tend to fall into the academic space, or in the internet world”.

So while data scientists will have a role to play, the spread of self-service BI tools that allow non-data scientists to explore data will have a greater impact on the business.

Use cases in 2015

According to Stires, all analytics or big data projects fall into one of three categories: revenue generation, cost savings or GRC (governance, risk and compliance).

IDC recently looked into the expected outcomes of BI in Asia Pacific (excluding Japan). The research indicates that in the coming year, revenue generation will be the top use for BI. GRC projects will be the next popular, with cost landing in last place.

According to the research, these revenue generation projects will take the form of improving competitive advantage, improving customer service and support, and customer acquisition and retention.

Across industries, IDC is seeing revenue generation “getting way more attention and executive support than cost savings”, he says.

Coming into 2015, Stires says, he would be asking “what are the revenue generating projects that I could be going after that my peers are doing?”

But not every analyst believes that revenue generation BI projects will be more popular than cost-cutting projects (though this disagreement may be due to the analysts covering different regions). IBRS’s Cranswick - who is speaking specifically about Australia, not the broader Asia Pacific - says it’s “not likely” that revenue will trump cost-cutting.

“Cost-cut has been the way for the last two years and one reason why Australian corporates have reported quite solidly over the period. The opportunities for growth are small in the current and near future with a fragile economy,” Cranswick says.

However, he acknowledges that this is “a generalisation” and that “some verticals may see opportunity” for putting BI to work looking for new revenues.

Stires suggests that it could be like a pendulum, “where right now [revenue generation]’s a huge focus and that’s going to shift back” to cost-cutting at some point in the future.

But right now, Stires says, very little of the conversations he’s having with the top banks, telcos and retailers are around cost optimisations. Instead, they’re asking “where is the new money going to come from?”

“Traditional brick and mortar stores are under a ton of threat and telcos are losing their SMS, voice and data revenues. Banks are losing out to ApplePay and Google Wallet. They’re like, shoot, our payment money is disappearing,” he says.

“Now you’ve got financing from Woolies and all these people who have financial instruments where they’re giving micro-loans. Okay, so now we can’t get that money, it’s like: where’s the money? They’re looking to analytics to give me guidance. ‘Help me find how to not become less relevant as a business,’” Stires says.

As for governance-based BI projects this year, he says these are “run rate things”.

“We see a ton of that. The number one industry that’s focusing on that is public sector, particularly government, and second is financial services. There’s a lot of projects that they have coming along in the next year around that,” he says.

In 2015, organisations will look to usage-based BI services operating on an OPEX model, Stires says. “Organisations will ask: ‘Where are the skills going to come from to help me support this, and is this something that I can either go out to a provider, or is it something that I need to outsource, or how do I do that?’”

“Particularly in the Australian market as you have an increase in people looking at cloud-based services, and looking at hosted analytics and hosted data services, it’s that really optimised mix of: it has to be revenue generating and give me some OPEX options,” he says.

These OPEX-based services could be cloud based, or just a hosted data centre service. “Somebody like a Telstra could have an OPEX-based offering,” Stires says.

An OPEX-based service may allow an organisation to kill a BI project easier than one that involved capital expenditure. “If it’s turning revenue, I can look at my profit,” Stires says. “If it’s not turning revenue, I cut off the spend.”

What the vendors are doing

In 2015, the larger BI vendors will look at the democratising self-serve features of the tools from the smaller vendors, and take note.

Some of the smaller vendors are “doing such a fantastic job pushing out easy-to-use self-discovery tools”, Koh says. “The other large vendors are also right now trying to incorporate that discovery feature into all their current traditional BI tools.”

This will be a wide-ranging effect, touching all the major vendors.

“Every single one of them - including IBM, SAS, Microsoft - all of them are actually trying to incorporate [these features]. They realise this is probably the fastest growing area and that’s why Tableau and these new BI tools are growing much faster than the rest of them,” Koh says.

This refocusing from the larger vendors is also partly because some have seen a plateauing of their revenues, he says.

IBRS’s Cranswick agrees that the larger vendors will look to the smaller for inspiration, noting simply: “That evolutionary process goes on.”

This large vendor craving for self-serve feature sets may lead to some consolidation in the market, according to the analysts.

“This year we may see acquisitions, simply to take the smaller vendors based on their features and clients, as part of the larger vendor portfolios,” Cranswick says. These acquisitions will also be due to financial reasons, he says: “Huge cash balances, interest rates, USD vs other currencies and growth prospects in the US versus foreign markets.”

Koh is of a similar mind, saying: “I do think there might be some more consolidation happening on this front, where a lot of them are trying to incorporate new features, not only just to meet the current needs but also the needs that they see in the future.”

One such need would be the ability to address new data sources. “It’s no longer just databases”, but also things like census data, Koh says.

“We will start seeing very vertical-specific business intelligence tools that allow the integration and analysis of these kinds of unstructured data for very specific purposes,” he predicts.

Looking at the stars

But it’s not just the larger vendors taking notes from the smaller; while the smaller vendors may have more innovative features like data discovery, they will in fact be taking on board some of the enterprise features of the tools from the larger vendors.

This is because the tools from the smaller vendors typically don’t have many of the features that big companies require.

Koh references the axiom ‘nobody ever got fired for buying IBM’, saying it’s relevant to this conversation “in the sense that the large organisations would require a certain sort of heavyweight vendor who’d be able to support their needs, and who they actual feel comfortable [with]”.

Specifically, these smaller BI vendors tend to lack the data governance features that large enterprise customers need. As such, this year the smaller players will look to “make sure that they have enterprise features to be able to support things like data governance”.

“For example, you see the recent acquisition of Jaspersoft by TIBCO to supplement their Spotfire capabilities,” Koh says.

Spotfire is one of the BI vendors that has focused on data discovery, while Jaspersoft instead focused on embedded analytics for the enterprise.

At the time of the purchase last year, TIBCO said in a statement: “The acquisition accelerates TIBCO’s expansion into embedded business intelligence and reporting, giving TIBCO the broad portfolio needed to address the two fastest growing segments of the business intelligence market.”

Koh adds: “So I think both [large and small vendors] are actually scrambling to try to support the needs of a more wider range of target audience.”

With all of these vendors borrowing features from one another’s products, “it’s going to be interesting in the marketplace to see where both are trying to fight for same target customers”, he says.

Cranswick agrees with the idea that the smaller vendors will add enterprise features, saying: “Inevitably the need to move up the chain to gain business where certain requirements are mandatory is the route they will have to adopt.”

But, he warns, “it may be expensive as the lock-in with larger vendors and often across other components means barriers to entry are high”.

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